The problem with taking these things out of the cloud is that you're then a hardware provider rather than a service provider.

Your revenue would come from selling increasingly inexpensive hardware and/or trying to sell your software to run in a consumer environment where you have very little control.

Very few companies can make money that way. Smartthings is backed by Samsung (800 lb gorilla). They appear to be playing a long game now because they provide cloud-backed service (for free) and cheap hardware. The strategy will very clear shift towards subscription service eventually, IMHO.